South Jersey Industries
1 South Jersey Plaza, Folsom, New Jersey 08037
Tel. (609) 561-9000 o Fax (609) 561-8225 o TDD ONLY 1-800-547-9085
Notice of Annual Meeting of Shareholders
April 29, 2004
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of South
Jersey Industries, Inc. will be held at the Renault Winery Restaurant, 72 N.
Bremen Avenue, Egg Harbor City, New Jersey, on Thursday, April 29, 2004, at
10:00 a.m., Eastern Time, for the following purposes:
1. To elect five Directors:
a. One Class II Director (Term expiring in 2006).
b. Four Class III Directors (Term expiring in 2007).
2. To approve the action of the Board of Directors in
appointing Deloitte & Touche LLP as auditors for 2004.
3. To transact such other business that may properly come
before the meeting.
The Board of Directors has fixed the close of business on February 26, 2004
as the record date for determining the shareholders of the Company entitled to
notice of and to vote at the Annual Meeting or any adjournments thereof.
Accordingly, only shareholders of record on that date are entitled to notice of
and to vote at the meeting.
You are cordially invited to attend the meeting. Whether or not you expect
to attend the meeting, we urge you to vote your shares now. Please complete and
sign the enclosed proxy card and promptly return it in the envelope provided or,
if you prefer, you may vote by telephone or the Internet. Please refer to the
enclosed proxy card for instructions on how to use these options. Should you
attend the meeting, you may revoke your proxy and vote in person.
By Order of the Board of Directors,
Richard H. Walker, Jr.
Vice President, Corporate Counsel &
Corporate Secretary
Folsom, NJ
March 15, 2004
Front Cover
YOUR VOTE IS IMPORTANT
PLEASE VOTE, SIGN, DATE, AND PROMPTLY RETURN YOUR PROXY IN THE
ENCLOSED ENVELOPE OR VOTE BY TELEPHONE OR BY THE INTERNET.
SOUTH JERSEY INDUSTRIES, INC.
PROXY STATEMENT_________________________________________________________________
This statement is furnished on behalf of the Board of Directors of South
Jersey Industries, Inc. to solicit proxies for use at its Annual Meeting of
Shareholders. The meeting is scheduled for Thursday, April 29, 2004, at 10:00
a.m. at the Renault Winery Restaurant, 72 N. Bremen Avenue, Egg Harbor City, New
Jersey. The approximate date proxy materials will be sent to shareholders is
March 15, 2004.
The Company bears the cost of this solicitation, which is primarily made by
mail. However, the Secretary or employees of the Company may solicit proxies by
phone, telegram, fax, e-mail or in person. The Company may also use a
proxy-soliciting firm at a cost not expected to exceed $2,500, plus expenses, to
distribute to brokerage houses and other custodians, nominees, and fiduciaries
additional copies of the proxy materials and Annual Report to Shareholders for
beneficial owners of our stock.
Only shareholders of record at the close of business on February 26, 2004
may vote at the meeting. On that date, the Company had 13,398,433 shares of
Common Stock outstanding. Shareholders are entitled to one vote per share on
each matter to be acted upon.
A quorum is necessary to conduct the business of the meeting. This means
that holders of at least a majority of the outstanding shares of Common Stock
must be present at the meeting, either by proxy or in person. Directors are
elected by a plurality vote of all votes cast at the meeting. The approval of
the Company's auditors and other matters that come before the meeting require
the affirmative vote of a majority of the votes cast at the meeting. Abstentions
and broker non-votes will be treated as present to determine a quorum but will
not be deemed to be cast and, therefore, will not affect the director elections
or the approval of the appointment of the independent auditors.
Properly signed proxies received by the Company will be voted at the
meeting. If a proxy contains a specific instruction as to any matter to be acted
on, the shares represented by the proxy will be voted in accordance with those
instructions. If you sign and return your proxy but do not indicate how to vote
for a particular matter, your shares will be voted "For" the election of the
nominated slate of directors and "For" approval of the appointment of Deloitte &
Touche LLP as the Company's independent auditors. A shareholder who returns a
proxy may revoke it at any time before it is voted. If you attend the meeting
and wish to revoke your proxy, you must notify the meeting's secretary in
writing prior to the voting of the proxy. If any other matters or motions
properly come before the meeting, including any matters dealing with the conduct
of the meeting, it is the intention of the persons named in the accompanying
proxy card to vote such proxy in accordance with their judgment.
DIRECTOR ELECTIONS_____________________________________________________________
At the Annual Meeting, five directors are to be elected to the Board of
Directors. One nominee is to be elected as a Class II Director to hold office
for a term of two years and four nominees are to be elected as Class III
Directors for a three-year term. As designated on the proxy card, unless
otherwise instructed, proxy votes will be cast for the following persons as
directors: Class II (term expiring in 2006) - Thomas A. Bracken; Class III (term
expiring in 2007) - Helen R. Bosley, Edward J. Graham, Herman D. James, Ph.D.and
Ambassador William J. Hughes. The Board of Directors, which currently consists
of nine members, is being increased to eleven members. Clarence D. McCormick, a
director in Class III whose term is expiring, is not standing for re-election in
accordance with the Board's retirement policy. Messrs. Bracken and Graham and
Ms. Bosley are standing for election by the Company's shareholders for the first
time. While we do not anticipate that, if elected, any of the nominees will be
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unable to serve, if any should be unable to accept the nomination or election,
the persons designated as proxies on the proxy card will vote for the election
of such other person as the Board of Directors may recommend.
NOMINEE_________________________________________________________________________
CLASS II
TERM EXPIRES IN 2006
Thomas A. Bracken has been a director since February 1, 2004, when he was
appointed as a director by the Board in anticipation of a board retirement. Age
56. Member of Audit and Compensation/Pension Committees. President and CEO of
Sun Bancorp, Inc. and its wholly owned subsidiary Sun National Bancorp, Inc.,
Vineland, NJ (2001 to date); Executive Vice President, Head of Commercial and
Governmental Banking for New Jersey, New York and Connecticut, First Union Bank,
(1998 - 2000); Executive Director Public Sector Group, First Union Bank, (2000 -
2001); trustee, College of New Jersey; Vice Chairman, New Jersey Chamber of
Commerce; director, New Jersey Bankers Association; chairman, Finance Committee,
New Jersey Cancer Institute; director, New Jersey Alliance for Action; director,
New Jersey Network; chairman, Keep New Jersey Moving Coalition; director South
Jersey Energy Company.
NOMINEES________________________________________________________________________
CLASS III
TERM EXPIRES IN 2007
Edward J. Graham has been a director since February 1, 2004 when he was
appointed as a director by the Board in connection with his promotion to Chief
Executive Officer. Age 46. Member of the Executive, Environmental and Management
Development Committees. President and Chief Executive Officer of the Company and
South Jersey Gas Company (February 1, 2004 to date); President and Chief
Operating Officer (2003 - January 31, 2004); President (2003 to date), South
Jersey Gas Company; President (2000 - 2003), South Jersey Energy Company; Vice
President of the Company (2000 - 2001); Senior Vice President, Energy
Management, South Jersey Gas Company (1998 - 2000); director, New Jersey State
Chamber of Commerce, Trenton, NJ; member, Leadership Council, American Gas
Association, Washington, DC; director, New Jersey Utilities Association,
Trenton, NJ; treasurer, Rowan University Foundation, Glassboro, NJ; director,
South Jersey Gas Company.
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NOMINEES (continued)____________________________________________________________
CLASS III
Term Expires in 2007
Helen R. Bosley, CFA has been a director since February 1, 2004 when she was
appointed as a director by the Board in connection with the expansion of the
Board. Age 56. Member of the Audit and Compensation/Pension Committees.
President, Corporate Financial Management, Inc., a financial management and
insurance consulting firm, Yardley, PA (1990 to date); President, TBN Agency,
Inc., Yardley, PA; trustee, Abington Memorial Foundation, Abington, PA; member,
Financial Analysts of Philadelphia, Philadelphia, PA; Chair, Investment
Committee, Girl Scouts of Southeastern PA, Miquon, PA; director South Jersey
Energy Company.
Herman D. James, Ph.D. has been a director since 1990. Age 60. Member of the
Compensation/Pension Committee, the Executive Committee, the Management
Development Committee and Chairman of the Audit Committee. Distinguished
Professor, Rowan University (1998 to date), President, Rowan University (1984 -
1998), Glassboro, NJ; director, American Association of State Colleges and
Universities, (1994 - 1998), Washington, DC; director, New Jersey State Chamber
of Commerce (1992 - 1998), Trenton, NJ.
Ambassador William J. Hughes has been a director since 2002. Age 71. Member of
the Audit Committee and the Nominating and Governance Committee. Of Counsel, law
firm of Riker, Danzig, Scherer, Hyland & Perretti, LLP (2000 to date),
Morristown and Trenton, NJ; Visiting Distinguished Scholar of Public Policy, The
Richard Stockton College of New Jersey (1999 to date), Pomona, NJ; Visiting
Professor, Rutgers, The State University of New Jersey (1999 to 2003), New
Brunswick, NJ; United States Ambassador to the Republic of Panama (1995 - 1998);
Member, United States House of Representatives (1975 - 1995); director, South
Jersey Gas Company.
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DIRECTORS CONTINUING IN OFFICE _________________________________________________
CLASS I
TERM EXPIRES IN 2005
Charles Biscieglia has been a director since 1998. Age 59. Chairman of the
Executive Committee, member of the Environmental Committee and the Management
Development Committee. Chairman of the Company (January 1, 2004 to date);
Chairman and Chief Executive Officer (2000 - January 31, 2004), President and
Chief Executive Officer (1998 - 2004) of the Company and South Jersey Gas
Company. Vice President (1997-1998) of the Company and Executive Vice President
and Chief Operating Officer (1991-1998) of South Jersey Gas Company; director,
American Gas Association, Washington, DC; Chairman-Elect, Board of Trustees,
Shore Memorial Hospital, Somers Point, NJ; director, United Way of Atlantic
County, NJ; director, South Jersey Gas Company.
Keith S. Campbell has been a director since 2000. Age 49. Member of the
Environmental Committee, the Nominating and Governance Committee and the
Management Development Committee. Chairman of the Board, Mannington Mills, Inc.,
Salem, NJ, a leading manufacturer of hard and soft surface flooring (1995 to
date); trustee, Rowan University, Glassboro, NJ; director, Skytop Lodge, Inc.;
director, South Jersey Energy Company.
W. Cary Edwards has been a director since September 1993 and was also a director
from April 1990 - January 1993. Age 59. Member of the Environmental Committee,
the Executive Committee, the Management Development Committee, Chairman of the
Compensation/Pension Committee. Commissioner, New Jersey State Commission on
Investigation (1997 to date); Senior Attorney, Edwards & Caldwell, LLC (1993 to
date); Of Counsel (1993) and New Jersey Managing Partner (1990 - 1993), law
firm, Mudge Rose Guthrie Alexander & Ferdon; Attorney General, State of New
Jersey (1986 - 1989); Chief Legal Counsel - Governor of New Jersey (1982 -
1986); trustee, Monmouth University (1991 to date); chairman and director, South
Jersey Sanitation, Inc. (2003 to date); director, South Jersey Energy Company.
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DIRECTORS CONTINUING IN OFFICE__________________________________________________
CLASS II
TERM EXPIRES IN 2006
Shirli M. Billings, Ph.D. has been a director since 1983. Age 63. Member of the
Executive Committee, the Compensation/Pension Committee, the Management
Development Committee and Chairman of the Nominating and Governance Committee.
President, Billings-Vioni Management Associates, New Albany, OH, a human
resource consulting firm (2001 to date); former President, Leadership Learning
Academy, Lakeland, FL, a human resource development agency (1999 - 2001);
Superintendent of Schools, Oberlin, OH (1994 - 1997); Vice President, Human
Resource Development, Honeywell, Inc., Minneapolis, MN (1985-1990); trustee,
Scholarship America, Saint Peter, MN.; director, South Jersey Gas Company.
Sheila Hartnett-Devlin, CFA has been a director since 1999. Age 45. Member of
the Audit Committee, the Compensation/Pension Committee and the Nominating and
Governance Committee. Formerly Executive Vice President (1997 - January 17,
2004), Senior Vice President (1991 - 1997), Vice President (1985 - 1991), Chair,
Global Investment Committee (1996 - January 17, 2004), Member, Investment Policy
Committee (1995 - January 17, 2004), Fiduciary Trust Company International, New
York, NY; formerly director, Fiduciary Trust Company of California, Los Angeles,
CA; member, New York Society of Security Analysts; director, South Jersey Gas
Company.
Frederick R. Raring has been a director since 1995. Age 66. Member of the
Executive Committee, the Audit Committee, the Nominating and Governance
Committee and Chairman of the Environmental Committee. President, Seashore
Supply Company, Ocean City, NJ, a major distributor of plumbing and heating
supplies and materials (1990 to date); director, South Jersey Gas Company.
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SECURITY OWNERSHIP
________________________________________________________________________________
Directors and Management
------------------------
The following table sets forth certain information with respect to the
beneficial ownership, as of February 13, 2004, of (a) each continuing director
and nominee for director, (b) our chief executive officer and the four other
most highly compensated executive officers during 2003 (collectively, the
"Named Executives") and (c) all of the directors and executive officers of the
Company as a group.
Percent
Number of Shares of
of Common Stock (1) Class
--------------------------------------------------------------------------------
Shirli M. Billings........................................7,866 (2) *
Charles Biscieglia.......................................33,393 *
Helen R. Bosley.............................................497 (2) *
Thomas A. Bracken...........................................228 (2) *
Keith S. Campbell...........................................988 (2) *
W. Cary Edwards...........................................4,309 (2) *
Edward J. Graham.........................................12,777 *
Sheila Hartnett-Devlin....................................4,711 (2) *
William J. Hughes.........................................1,744 (2) *
Herman D. James...........................................5,339 (2) *
Frederick R. Raring......................................27,402 (2) *
David A. Kindlick........................................18,002 *
Albert V. Ruggiero........................................6,469 *
Richard H. Walker, Jr.....................................4,432 *
All continuing directors, nominees for director
and executive officers as a group (19 persons)..........146,990 1.1
--------------------------------------------------------------------------------
* Less than 1%.
Notes:
(1) Based on information furnished by the Company's directors and executive
officers. Unless otherwise indicated, each person has sole voting and
dispositive power with respect to the Common Stock shown as owned by him or her.
(2) Includes shares awarded to each director under a Restricted Stock Program
for Directors. Restricted stock owners have the power to vote shares but no
investment power with respect to the shares until the restrictions lapse.
Stock Ownership Requirements
----------------------------
The Board of Directors believes that significant ownership of Company Common
Stock better aligns the interests of management of the Company and its principal
subsidiaries with that of the Company's shareholders. Therefore, the Board of
Directors enacted the following stock ownership requirements for officers and
directors:
* The Chief Executive Officer is required to own shares of Company Common
Stock with a market value equal to a minimum of three times his or her annual
base salary;
* Other executive officers are required to own shares of Company Common Stock
with a market value equal to a minimum of one and one-half times their annual
base salary;
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* Other officers are required to own shares of Company Common Stock with a
market value equal to a minimum of their annual base salary;
* Shares owned outright will be combined with vested restricted shares awarded
under the Long-Term Incentive Program and vested shares beneficially owned
through any employee benefit plan for purposes of determining compliance with
the stock ownership requirement for officers. Current officers will have a
period of six years from the original date of adoption and newly elected or
promoted officers will have a period of six years following their election or
promotion to a new position to meet these minimum stock ownership requirements;
and
* Members of the Board of Directors are required, within six years of becoming
a director of the Company or any of its principal subsidiaries, to own shares of
Company Common Stock with a market value equal to a minimum of five times the
current value of the Board's annual cash retainer. Shares owned outright will be
combined with restricted shares awarded as part of the annual stock retainer for
the purpose of meeting these requirements.
Section 16(a) Beneficial Ownership Reporting Compliance
-------------------------------------------------------
Pursuant to Section 16(a) of the Securities Exchange Act of 1934, the
Company's directors and executive officers are required to file reports with the
Securities and Exchange Commission relating to their ownership of and
transactions in the Company's Common Stock. Based on our records and other
information, the Company believes that all Section 16(a) filing requirements
were met for 2003.
Security Ownership of Certain Beneficial Owners
-----------------------------------------------
The following table sets forth certain information, as of February 13,
2004, as to each person known to the Company, based on filings with the
Securities and Exchange Commission, who beneficially owns 5% or more of the
Common Stock. The shareholder named below has sole voting and investment power
with respect to such shares.
Percent
of
Name and Address of Beneficial Owner Shares Beneficially Owned Class
---------------------------------------------------------------------------
Dimensional Fund Advisors, Inc. 712,621 5.3%
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401-1005
THE BOARD OF DIRECTORS _________________________________________________________
Corporate Governance
--------------------
Independence of Directors
The Board has adopted Corporate Governance Guidelines that require the
Board to be composed of a majority of outside directors who are "independent
directors" as defined by the rules of the New York Stock Exchange. No director
will be considered "independent" unless the Board of Directors affirmatively
determines that the director has no material relationship with the Company. When
making "independence" determinations, the Board considers all relevant facts and
circumstances, as well as any other facts and considerations specified by the
New York Stock Exchange, by law or by any rule or regulation of any other
regulatory body or self-regulatory body applicable to the Company. As a part of
its Corporate Governance Guidelines, the Board had established the policy that
Board members may not serve on more than four other boards of publicly traded
companies.
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Certain Relationships
Of all of the non-employee outside directors, one current director, Mr.
Campbell, and one non-employee nominee standing for election, Mr. Bracken, have
business relationships which warrant closer consideration of the independence
rules. Mr. Campbell is Chairman of Mannington Mills, Inc., which purchases
natural gas from subsidiaries of the Company. Commencing January 2004, as a
result of winning a competitive bid, another subsidiary of the Company owns and
operates a cogeneration facility that provides electricity to Mannington Mills,
Inc. Mr. Bracken is President of Sun National Bancorp, Inc., which provides a
$10 million line of credit for the Company and its subsidiaries, a $10 million
letter of credit for the Company and a bank account for another subsidiary of
the Company. The Board has determined that Messrs. Campbell and Bracken, as well
as all the other non-employee directors, meet the New York Stock Exchange
standards for independance and are, therefore, considered to be independent
directors. During 2003, nine of the ten directors of the Board were considered
to be "independent."
Code of Conduct
The Company has adopted codes of conduct for all employees, officers and
directors which includes the code of ethics for our principal executive, our
principal financial officer and principal accounting officer within the meaning
of the SEC regulations adopted under the Sarbanes-Oxly Act of 2002. A copy of
the codes of ethics are available on the Company's website at
www.sjindustries.com under the heading Investor Relations.
Communication with Directors
The independent directors of the Board meet at least two times each year.
These meetings are chaired by the independent director Chairman of each of the
Board's Audit, Compensation/Pension or Nominating and Governance Committee. The
designation of chairman is determined in accordance with the principal items to
be considered at the meeting and which committee has responsibility for such
matters. Experience has shown that this procedure, which has been the Board's
practice, has been effective in providing independent leadership without
requiring the need for a lead director. You may communicate with the Chairmen of
the Audit, Compensation/Pension and Nomination and Governance Committee by
sending an e-mail to auditchair@sjindustries.com, compchair@sjindustries.com or
nomgovchair@sjindustries.com or you may communicate with our outside independent
directors as a group by sending an e-mail to sjidirectors@sjindustries.com. The
charters and scope of responsibility for each of the Company's committees can be
found on the Company's website at www.sjindustries.com. You may also address any
correspondence to the chairmen of the committees or the outside directors at
South Jersey Industries, Inc., 1 South Jersey Plaza, Folsom, New Jersey, 08037.
Meetings of the Board of Directors and its Committees
-----------------------------------------------------
The Board of Directors met seven times in 2003. Each director attended 90%
or more of the total number of meetings of the Board of Directors and the
meetings of the committees of the Board on which he or she served. Nine
directors attended the 2003 Annual Meeting of Shareholders. During 2003, each of
the directors of the Company also served on the Boards of one or more of South
Jersey Gas Company, South Jersey Energy Company, Energy & Minerals, Inc. and R&T
Group, Inc., all of which are direct subsidiaries of the Company.
There are six standing committees of the Board: the Audit Committee; the
Compensation/Pension Committee; the Environmental Committee; the Executive
Committee; the Nominating and Governance Committee; and the Management
Development Committee.
The Audit Committee of the Board of Directors, which met four times during
2003, is comprised of six "independent" directors as that term is defined in the
rules and regulations of the Securities and Exchange Commission and the listing
standards of the New York Stock Exchange: Dr. Herman D. James, Chairman;Helen R.
Bosley; Thomas A. Bracken; Sheila Hartnett-Devlin; William J. Hughes; and
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Frederick R. Raring. The Board of Directors has designated Ms. Hartnett-Devlin
as an "audit committee financial expert" as such term is defined by applicable
rules and regulations of the Securities and Exchange Commission. The Audit
Committee: (1) annually recommends to the Board a firm of independent public
accountants for appointment, subject to shareholder approval, as auditors of the
Company and has the authority to unilaterally retain, compensate and terminate
the Company's independent public accountants; (2) reviews with the independent
auditors the scope and results of each annual audit; (3) reviews with the
independent auditors, the Company's internal auditors and management the quality
and adequacy of the Company's internal controls and the internal audit
function's organization, responsibilities, budget and staffing; and (4)
considers the possible effect on the objectivity and independence of the
independent auditors of any non-audit services to be rendered to the Company.
The Audit Committee has established policies and procedures for the engagement
of the independent public accountant to provide audit and permitted non-audit
services. The Audit Committee evaluates itself on an annual basis. The Audit
Committee's activities and the scope of its responsibilities are more fully
described in the Audit Committee Report (at page 16). The Board of Directors has
adopted a written charter for the Audit Committee as adopted by the Company's
Board of Directors. A copy of such charter is attached hereto as Exhibit A and
is available on the Company's web site at www.sjindustries.com under the heading
Investor Relations.
The Compensation/Pension Committee of the Board of Directors, which met
five times during 2003, is comprised of seven "independent" directors: W. Cary
Edwards, Chairman; Dr. Shirli M. Billings; Helen R. Bosley; Thomas A. Bracken;
Sheila Hartnett-Devlin; Dr. Herman D. James; and Clarence D. McCormick. Each
member of the Committee satisfies the independence requirements of the New York
Stock Exchange. The Compensation/Pension Committee: (1) is responsible for
making grants under and otherwise administering the Company's Stock-Based
Compensation Plan; (2) reviews and makes recommendations to the Board of
Directors on the operation, performance and administration of the retirement
plans, other employee benefit plans and employment policies; and (3) reviews and
makes recommendations to the Board of Directors on forms of compensation,
including the performance and levels of compensation of the officers of the
Company. A copy of the Committee's charter is available on the Company's web
site at www.sjindustries.com under the heading Investor Relations.
The Environmental Committee of the Board of Directors, which did not meet
during 2003, is comprised of five directors: Frederick R. Raring, Chairman;
Charles Biscieglia; Keith S. Campbell; W. Cary Edwards; and Edward J. Graham.
The Environmental Committee: (1) reviews and evaluates management activities
with respect to environmental remediation of the Company's and its subsidiaries'
current and former properties; and (2) oversees litigation against the Company's
insurance carriers for the recovery of remediation costs. A copy of the
Committee's charter is available on the Company's web site at
www.sjindustries.com under the heading Investor Relations.
The Executive Committee of the Board of Directors, which met two times
during 2003, is comprised of seven directors: Charles Biscieglia, Chairman; Dr.
Shirli M. Billings; W. Cary Edwards; Edward J. Graham; Dr. Herman D. James;
Clarence D. McCormick; and Fredrick R. Raring. The Executive Committee: (1)
formulates policies to be followed in planning and conducting the business and
affairs of the Company; and (2) may act on behalf of the Board of Directors
during intervals between meetings of the Board in managing the business and
affairs of the Company. A copy of the Committee's charter is available on the
Company's web site at www.sjindustries.com under the heading Investor Relations.
The Nominating and Governance Committee of the Board of Directors, which
met four times during 2003, is comprised of six directors: Dr. Shirli M.
Billings, Chairman; Keith S. Campbell; Sheila Harnett-Devlin; William J. Hughes;
Clarence D. McCormick; and Frederick R. Raring. Each member of the Committee
satisfies the independence requirements of the New York Stock Exchange. Among
its functions, the Nominating Committee: (1) maintains a list of prospective
candidates for director, including those recommended by shareholders; (2)
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reviews the qualifications of candidates for director (minimum qualifications
for director candidates are provided in the Company's Corporate Guidelines
available on the Company's web site at www.sjindustries.com under the heading
Investor Relations and include consideration of education, experience,
judgement, diversity and other applicable and relevant skills as determined by
an assessment of the needs of the Board at the time an opening exists); (3)
makes recommendations to the Board of Directors to fill vacancies and for
nominees for election to be voted on by the shareholders; and (4) is responsible
for monitoring the implementation of the Company's Corporate Governance Policy.
The Nominating and Governance Committee will consider nominees for the Board of
Directors recommended by shareholders and submitted, in compliance with the
Company's bylaws, in writing to the Secretary of the Company. Any shareholder
wishing to propose a nominee should submit a recommendation in writing to the
Company's Secretary, indicating the nominee's qualifications and other relevant
biographical information and providing confirmation of the nominee's consent to
serve as a director. A copy of the Committee's charter is available on the
Company's web site at www.sjindustries.com under the heading Investor Relations.
The Management Development Committee of the Board of Directors, which met
once during 2003, is comprised of six directors: Charles Biscieglia, Chairman;
Dr. Shirli M. Billings; Keith S. Campbell; W. Cary Edwards; Edward J. Graham;
and Dr. Herman D. James. The Management Development Committee: (1) reviews the
Company's programs and practices used to develop employees identified for
leadership positions in the organization; and (2) evaluates training and
educational programs to assure that they reflect current and emerging workplace,
industry and general business issues. A copy of the Committee's charter is
available on the Company's web site at www.sjindustries.com under the heading
Investor Relations.
Compensation of Directors
-------------------------
During 2003, non-employee directors received shares of restricted stock
with a market value of $9,000. In addition, they receive $1,000 for each meeting
of the Board of the Company or its subsidiaries attended, except that the
maximum fee paid to any person for attendance at one or more meetings of these
boards held on the same day is $1,000. Non-employee directors also receive $500
for each meeting of a Committee of the Board of the Company or of a subsidiary
that they attend if the meeting is held on the same day as a Board meeting or
$1,000 if the meeting is held on any other day. Non-employee directors who
participate telephonically in a Board or Committee meeting receive $500. During
2003, chairmen of each committee were paid an additional $200 for each meeting
of their committee that they attend. During 2003, non-employee members of the
Executive Committee were paid an annual retainer of $16,600, and all other
non-employee Board members received an annual retainer of $14,100. Directors who
are also officers of the Company receive no separate compensation for serving on
the Board. The Company has established a plan whereby directors may elect to
defer the receipt of fees until a specified date or until retirement from the
Board. The deferred amount, together with interest, may be paid in a lump sum or
in equal annual installments as the director elects.
In 2003, a study of non-employee director compensation was conducted by
outside compensatioin consultants comparing the Company's director compensation
with a relevant peer group. The consultants recommended and the Board approved
targeting non-employee director compensation at the median of the peer group.
Accordingly, effective January 1, 2004, non-employee directors receive annually
shares of restricted stock with a market value of $13,000. Non-employee members
of the Executive Committee are paid an annual retainer of $20,000 and all other
non-employee directors are paid an annual retainer of $17,500. Chairmen of
certain committee are paid a retainer as follows: Audit, $5,000; Executive,
$4,000; Compensation/Pension, $4,000; Nominating & Governance, $4,000. Chairmen
of the Environmental and Management Development committees are paid an
additional $300 per meeting.
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COMPENSATION/PENSION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION_______________________________________________________
The Compensation/Pension Committee consists of five independent directors.
Among other responsibilities, the Committee makes recommendations to the Board
regarding the Company's executive compensation policies, practices and
objectives. The Committee administers the Company's Annual Cash and Stock-Based
Compensation plans.
The current executive compensation structure has been in place since 1998
and applies to all officers of the Company. At that time, a comprehensive study
of compensation alternatives was undertaken, a primary objective being the
creation of a system which aligns the interest of Company shareholders with the
financial incentives of executives on a short-term and long-term basis. That
study drew upon the experience and knowledge of Committee members in
consultation with their independent compensation consultant. In November 2002,
an update to the 1998 study was completed, to ensure that the structure remained
consistent with contemporary compensation methods and tools. The Committee's
consulting firm presented a detailed update which reexamined the component parts
of the executive compensation program as currently applied. Further, the report
provided a competitive analysis of how executives' base salary, annual cash and
long-term compensation compared to peer companies in the energy industry and the
general business community. The Committee evaluated and assessed those findings
in the context of the Company's performance over the past five years and the
growth predicted going forward. The Committee determined that its executive
compensation policy and methodology were advancing the corporate mission while
attracting and retaining qualified executive management to carryout the work and
goals of the organization.
In 2003, the Committee engaged its consultant to provide a market-based
update to its executive compensation schedule, in anticipation of January 2004
compensation adjustments. That update was completed and presented in September
2003. Total annual direct compensation forecasted for 2004 for the executive
group, exclusive of the CEO, reported at the 88th percentile of the competitive
market median. Using the same data sources, for 2003 the total annual direct
compensation of Mr. Biscieglia, the Chief Executive Officer, reported at
approximately 63% of the competitive market median. In February of 2004, Mr.
Biscieglia retired from his role as CEO, remaining as Chairman of the Company's
Board of Directors. Mr. Graham assumed the CEO role with total annual direct
compensation of approximately 59% of the market median.
Also in 2003, the Committee directed the completion of a study to examine
the efficacy of the peer group utilized for the long-term incentive component.
In May this report was completed and presented to the Committee. The criteria
and screening process employed by the consultant was carefully reviewed and
discussed. The Committee found the process sound and appropriate. A defined
procedure and schedule for peer group population and review was adopted and
documented in the Committee's chart of activities.
The established incentive-based executive compensation structure consists
of three parts, two of which are directly linked to achieving predefined
short-term and long-term performance goals. These three components were fully
implemented with respect to compensation and performance for fiscal year 2000
and each year thereafter. They are as follows:
* Base Salary - which is set at the 50th percentile of the relevant peer
market;
* Annual Cash Awards - which provides an annual award, 75% of which is
directly tied to the Company's earnings per share from continuing operations,
with the balance based upon specific, predefined performance objectives for each
executive; and
-11-
* Long-Term Incentive - which employs equity-based instruments, currently
restricted stock grants, which are earned based upon the Company's relative
total shareholder return, measured against industry peer companies, over
three-year cycles.
In general, executive base salaries, including that of Mr. Biscieglia,
were increased in January 2003 to provide a 4.5% adjustment, which was the
market adjustment recommended by the Committee's consultant.
In January 2003, long-term incentive grants were provided to executives,
including Mr. Biscieglia, in the form of restricted stock. The performance
period for this long-term incentive is the three-year period ending December 31,
2005. The Committee established at-risk threshold, target and maximum incentive
levels based upon total shareholder returns for the period compared to
shareholder returns of the predefined peer group. Grants are detailed in the
Summary Compensation Table. Also, in March 2004, performance-based restricted
stock grants provided in January 2001 vested and were awarded to executives,
including Mr. Biscieglia. Awards are detailed in the Summary Compensation Table.
In January 2004, annual cash awards with respect to fiscal 2003 were
provided to executives, including Mr. Biscieglia, 75% of which were based upon a
predetermined earnings per share target from continuing operations for 2003,
with the remaining 25% based upon individual performance goals. Awards are
detailed in the Summary Compensation Table.
The Committee believes that the Company's performance over the past five
years provides tangible evidence that at-risk compensation, both annual and
long-term, should continue to represent a significant portion of total executive
compensation. Annual incentives promote short-term performance which instills a
measure of deserved confidence in the Company's ability to produce consistent
results, year after year. The use of a time-restricted, stock-based incentive
strongly encourages management to conduct the business of the Company in ways
that advance both the market value of its stock and its ability to continue to
provide a competitive dividend to shareholders over time. The alignment of
interests is desirable and works to the benefit of Company shareholders.
Compensation/Pension Committee
W. Cary Edwards, Chairman
Dr. Shirli M. Billings
Sheila Hartnett-Devlin
Dr.Herman D. James
Clarence D. McCormick
-12-
EXECUTIVE COMPENSATION__________________________________________________________
Summary Compensation Table
--------------------------
The following table sets forth compensation paid to or earned by each of the
Named Executives during the past three fiscal years.
Long-Term
Annual Compensation Compensation
------------------------ ------------
(a) (b) (c) (d) (e) (f) (g)
Name Other
and Annual Restricted All Other
Principal Base Annual Compen- Stock Compen-
Position(s) Year Salary Cash sation(1) Awards(2) sation(3)
------------------------------------------------------------------------------------------------------------------------------------
Charles Biscieglia (4) 2003 $ 384,330 $144,124 $ 9,868 $ 230,598 $ 29,900
Chairman & CEO; CEO of South Jersey 2002 367,780 110,335 9,874 183,890 11,945
Gas Company 2001 351,020 108,155 4,436 175,634 11,365
Edward J. Graham(5) 2003 300,000 93,750 5,353 165,000 6,990
President and Chief Operating Officer and 2002 225,110 45,021 2,237 90,044 6,229
President of South Jersey Gas Company 2001 214,314 44,132 4,467 86,000 3,666
David A. Kindlick 2003 203,820 50,957 205 101,910 6,648
Vice President, Treasurer and Chief Financial 2002 195,050 39,009 627 78,020 6,121
Officer; Executive Vice President and Chief 2001 186,060 38,238 592 74,516 5,685
Financial Officer of South Jersey Gas Company
Albert V. Ruggiero 2003 203,820 50,957 205 101,910 7,858
Vice President; Executive Vice President and 2002 195,050 39,009 627 78,020 6,452
Chief Administrative Officer of South Jersey 2001 186,158 38,238 3,871 74,516 4,047
Gas Company
Richard H. Walker, Jr.(6) 2003 149,030 36,575 - 43,890 6,676
Vice President, Corporate Counsel & 2002 140,000 28,000 - 19,632 6,135
Corporate Secretary; Senior Vice President, 2001 125,000 19,243 - 18,750 6,066
Corporate Secretary & Corporate Counsel
of South Jersey Gas Company
Footnotes to Summary Compensation Table
(1) The Internal Revenue Code limits the contributions that may be made by or
on behalf of an individual under defined contribution plans such as the
Company's 401(k) Plan. The Company has adopted a policy of currently reimbursing
its executive officers with the amount of Company contributions that may not be
made because of this limitation. This includes the tax liability incurred by the
additional income. Amounts paid pursuant to this policy are included in column
(e) of the table.
(2) The dollar values of restricted shares expressed are based on market price
at the time of the grant. On March 1, 2004, restricted stock grants reflected
as 2001 Long-Term Compensation vested, with the Company achieving total
shareholder return for the three year period ending December 31, 2003 at the
73.9th percentile of its predefined peer group of companies. Shares vested and
awarded for the Named Executives and their aggregate value as of
December 31, 2003 were as follows: Mr. Biscieglia - 9,488/$384,264;
Mr. Graham - 4,646/$188,163; Mr. Kindlick - 4,025/$163,013;
Mr. Ruggiero - 4,025/$163,013; Mr. Walker - 1,013/$41,027. Dividends paid on
restricted shares are reinvested in additional shares that have the same
-13-
restrictions and vesting schedule as their respective underlying restricted
shares. Restrictions on all shares granted (including shares from reinvested
dividends) lapse 38 months from their respective date of grant. All restricted
stock grants carry a risk of forfeiture and awards for the 2002 and 2003 grants
will depend upon the Company achieving certain performance goals as measured
against its peer group.
(3) Includes employer contributions to the Company's 401(k) Plan, the income
value of group life insurance and the increase in vested benefit level of
deferred compensation contracts, if any. The 2002 values for these items are
listed below:
Biscieglia Graham Kindlick Ruggiero Walker
--------------------------------------------------------------------------------
401(k) Plan $ 6,000 $ 6,000 $ 6,000 $ 6,000 $ 6,000
Group Life Insurance 3,715 990 648 1,858 676
Deferred Compensation 20,185 - - - -
--------------------------------------------------------------------------------
Total Value $ 29,900 $ 6,990 $ 6,648 $ 7,858 $ 6,676
(4) Retired as CEO effective January 31, 2004.
(5) Elected to this office effective February 1, 2004.
(6) Elected to this office effective June 1, 2003.
Securities Authorized for Issuance Under Equity Compensation Plans
------------------------------------------------------------------
The following table provides information as of December 31, 2003 relating
to equity compensation plans of the Company pursuant to which grants of
restricted stock, options or other rights to acquire shares may be made from
time to time.
Equity Compensation Plan Information
(a) (b) (c)
Number of securities remaining
Number of securities to available for future issuance
be issued upon exercise Weighted average exercise under equity compensation
Plan Category of outstanding options price of outstanding options, plans excluding securities
warrants and rights warrants and rights reflected in column (a)
(#) ($) (#)
-------------------------------------------------------------------------------------------------------------------------------
Equity compensation plans
approved by security
holders(1) 119,509 -(3) 85,197
Equity compensation plans
not approved by security
holders(2) 28,288 -(3) -(4)
-------- --------
Total 147,797 85,197
(1) These plans include the Company's Officers.
(2) These plans include the Company's Directors.
(3) Only Restricted Stock has been issued under the plan.
(4) Director's Restricted Stock Plan does not specify the number of shares that
may be issued thereunder.
-14-
EXECUTIVE PENSION PLANS_________________________________________________________
The following table illustrates the current retirement benefits under the
salaried employee pension plan and the supplemental executive retirement plan,
assuming the executive retires at age 60.
Years of Service
------------------------------------------------------------------------------------------------------------------------------
Remuneration 15 20 25 30 35 40
------------------------------------------------------------------------------------------------------------------------------
$125,000 $43,750 $56,250 $68,750 $81,250 $81,250 $81,250
$150,000 $52,500 $67,500 $82,500 $97,500 $97,500 $97,500
$175,000 $61,250 $78,750 $96,250 $113,750 $113,750 $113,750
$200,000 $70,000 $90,000 $110,000 $130,000 $130,000 $130,000
$225,000 $78,750 $101,250 $123,750 $146,250 $146,250 $146,250
$250,000 $87,500 $112,500 $137,500 $162,500 $162,500 $162,500
$300,000 $105,000 $135,000 $165,000 $195,000 $195,000 $195,000
$400,000 $140,000 $180,000 $220,000 $260,000 $260,000 $260,000
$450,000 $157,500 $202,500 $247,500 $292,500 $292,500 $292,500
$500,000 $175,000 $225,000 $275,000 $325,000 $325,000 $325,000
------------------------------------------------------------------------------------------------------------------------------
The executive officers of the Company are eligible for benefits under a
tax-qualified pension plan for salaried employees provided by the Company.
Compensation considered under the pension plan consists of base salary only,
which in the case of the executive officers is included in the cash compensation
reported in column (c) of the Summary Compensation Table. Employees do not make
contributions to the plan, and the employer contributions (which are based on
aggregate actuarial calculations without individual allocation) are held and
invested in a diversified portfolio of funds of recognized standing until they
are used to provide retirement benefits. Early retirement with reduced annual
benefits is permitted (but not before age 55). Executive officers who are 50
years of age or older are also covered by an unfunded supplemental retirement
plan that is designed in general to provide the officer with a minimum
retirement benefit from the salaried employee pension plan and the supplemental
plan that aggregates 2% of the average of the highest three of the final six
years' salary (as defined in the plan), for each year of service, plus 5%.
Assuming continued employment and retirement at age 60, Messrs. Biscieglia,
Graham, Kindlick, Ruggiero and Walker will have, respectively, 36, 36, 35, 19
and 31 years of credited service. No credit is provided under the supplemental
plan for more than 30 years of service.
Employment Contracts
--------------------
The Company has employment agreements with each of the Named Executives.
Mr. Biscieglia's employment agreement was for the period ending January 31,
2004, at which time Mr. Biscieglia retired as the Company's Chief Executive
Officer. The other Named Executives have agreements for a three-year period
ending December 31, 2005, which provide for a base salary that will be reviewed
periodically but will not be less than what was being paid at the beginning of
the period. If a change of control (as defined in each agreement) occurs, the
agreement is automatically extended for three years from the date the change of
control occurs. If, during the extended term of the agreement, the officer's
employment is terminated for other than cause, or if he resigns after there has
been a significant adverse change in his employment arrangement with the
Company, he is entitled to a severance payment equal to 300% of his average
annual compensation during the preceding five calendar years. If the officer's
employment agreement is terminated for other than cause without a change of
control, he is entitled to a severance payment equal to 150% of his average
annual compensation during the preceding five calendar years.
-15-
STOCK PERFORMANCE_______________________________________________________________
The graph below compares the cumulative total return on the Company's
Common Stock for the five- year period ended December 31, 2003 with the
cumulative total return on the S&P 500 and the S&P Utility Index. The graph
assumes that $100 was invested on December 31, 1998 in the Company's Common
Stock, the S&P 500 and the S&P Utility Index and that all dividends were
reinvested. Standard & Poor's Utility Index is a commonly used indicator of
utility common stock performance based on selected gas, electric and telephone
companies. The compounded annual growth rate for the Company on the graph is
14.5%. This compares with -0.6% for the S&P 500 and -2.5% for the S&P Utility
Index.
Indexed Total Return Over 5 Years Assuming Dividends Reinvested
1998 1999 2000 2001 2002 2003
S&P 500 100 121 110 96.9 75.5 97.2
S&P UTIL 100 91.1 143.2 99.6 69.8 88.1
SJI 100 114.8 126.4 145.3 154 197.1
AUDIT COMMITTEE REPORT__________________________________________________________
The Audit Committtee of the Board of Directors is comprised of six
directors, each of whom is independent as defined under the listing standards of
the New York Stock Exchange. The Board has determined that Sheila
Hartnett-Devlin is an "audit committee financial expert" as defined by the rules
of the Securities and Exchange Commission. The Audit Committee's activities and
scope of its responsibilities are set forth in a written charter adopted by the
Board, a copy of which is attached hereto as Exhibit A and posted on the
Company's website at www.sjindustries.com under the heading Investor Relations.
In accordance with its charter adopted by the Board of Directors, the Audit
Committee, among other things, assists the Board in fulfilling its
responsibility for oversight of the quality and integrity of the accounting,
auditing and financial reporting practices of the Company. Management has the
responsibility for the preparation of the Company's financial statements and the
independent auditors have the responsibility for the examination of those
statements.
The Audit Committee reviewed the audited financial statements of the
Company for the fiscal year ended December 31, 2003 with management and with
Deloitte & Touche LLP, the Company's independent auditors. The Audit Committee
discussed with the independent auditors the matters required to be discussed by
Statement on Auditing Standards No. 61, "Communication with Audit Committees,"
-16-
relating to the conduct of the audit. The Audit Committee also received written
disclosures from Deloitte & Touche LLP regarding its independence from the
Company as required by Independence Standards Board Standard No. 1,
"Independence Discussions with Audit Committees," and has discussed with
Deloitte & Touche LLP the independence of that firm.
Based on the above-mentioned review and discussions with management and the
independent auditors, the Audit Committee recommended to the Board that the
Company's audited financial statements be included in its Annual Report of Form
10-K for the fiscal year ended December 31, 2003, for filing with the Securities
and Exchange Commission.
Audit Committee
Dr. Herman D. James, Chairman
Sheila Hartnett-Devlin
William J. Hughes
Frederick R. Raring
APPOINTMENT OF AUDITORS_________________________________________________________
Upon the recommendation of the Audit Committee, the Board of Directors,
subject to the approval of the shareholders, has reappointed Deloitte & Touche
LLP, independent public accountants, as the auditors of the Company for 2004.
Unless otherwise directed, proxies will be voted "FOR" approval of this
appointment. If the shareholders do not ratify this appointment by the
affirmative vote of a majority of the votes cast at the meeting, other auditors
will be considered by the Board upon recommendation of the Audit Committee.
Deloitte & Touche LLP served as the auditors of the Company during 2003.
During 2003, the audit services performed by that firm for the Company consisted
of the audits of the financial statements of the Company and its subsidiaries
and the preparation of various reports based on those audits, services related
to filings with the Securities and Exchange Commission and the New York Stock
Exchange, and audits of employee benefit plans as required by the Employee
Retirement Income Security Act. A representative of Deloitte & Touche LLP is
expected to be present at the Annual Meeting and will have the opportunity to
make a statement, if he desires to do so, and to respond to appropriate
questions from shareholders.
Fees Paid to Auditors
---------------------
As part of its duties, the Audit Committee also considered whether the
provision of services other than the audit services by the independent auditors
to the Company is compatible with maintaining the accountants' independence. In
accordance with its charter, the Audit Committee must pre-approve all services
provided by Deloitte & Touche LLP. The fees for all services provided by the
independent auditors to the Company during 2003 and 2002 are as follows:
Audit Fees
The aggregate fees billed for the audit of the Company's annual financial
statements for fiscal years 2003 and 2002 and for the reviews of the financial
statements included in the Company's Quarterly Reports on Form 10-Q during each
such year were $304,500 and $252,500, repectively.
Audit-Related Fees
The aggregate fees billed for audit-related services for fiscal years 2003
and 2002 were $35,000 and $29,500, respectively. These fees related to employee
benefit plans, transfer agent and registrar audits performed in 2003 and 2002.
-17-
Tax Fees
The aggregate fees billed for tax services for fiscal years 2003 and 2002
were $38,763 and $38,162, respectively. These fees were for tax consultation and
compliance services for 2003 and 2002.
All Other Fees
There were no other fees paid to Deloitte & Touche LLP in 2003 or 2002.
ANNUAL REPORT AND FINANCIAL INFORMATION_________________________________________
A copy of the Company's Annual Report to Shareholders for the year ended
December 31, 2003 accompanies this proxy statement. The Annual Report is not
proxy-soliciting material or a communication by which any solicitation is made.
Upon written request of any person who on the record date for the Annual
Meeting was a record owner of the Common Stock, or who represents in good faith
that he or she was on that date a beneficial owner of such stock and is entitled
to vote at the Annual Meeting, the Company will send to that person, without
charge, a copy of its Annual Report on Form 10-K for 2003, as filed with the
Securities and Exchange Commission. Requests for this report should be directed
to Richard H. Walker, Jr., Vice President, Corporate Counsel and Corporate
Secretary, South Jersey Industries, Inc., 1 South Jersey Plaza, Folsom, New
Jersey 08037.
OTHER MATTERS___________________________________________________________________
Any proposal which a qualified shareholder of the Company wishes to include
in the Company's proxy statement to be sent to shareholders in connection with
the Company's 2005 Annual Meeting of Shareholders that is received by the
Company after November 16, 2004 will not be eligible for inclusion in the
Company's proxy statement and form of proxy for that meeting. To be a qualified
shareholder, a shareholder must have owned at least $2,000 in market value of
the Company's securities for at least one year before the date of submission of
the proposal to the Company. In compliance with the Company's bylaws,
shareholders must provide the Company with at least 60 days, but no more than 90
days, notice prior to an announced annual meeting date of (i) business the
shareholder wishes to raise at the meeting and (ii) persons, if any, the
shareholder wishes to nominate for election as directors at that meeting.
The Board of Directors knows of no matters other than those set forth in
the Notice of Annual Meeting of Shareholders to come before the 2004 Annual
Meeting.
By Order of the Board of Directors,
Richard H. Walker, Jr.
Vice President, Corporate Counsel &
Corporate Secretary
March 15, 2004
-18-
APPENDIX A______________________________________________________________________
SOUTH JERSEY INDUSTRIES, INC.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
CHARTER
I. PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing: the
financial reports and other financial information provided by the Corporation to
any governmental body or the public; the Corporation's systems of internal
controls regarding finance, accounting, legal compliance and ethics that
management and the Board have established; and the Corporation's auditing,
accounting and financial reporting processes generally. Consistent with this
function, the Audit Committee encourages continuous improvement of, and fosters
adherence to, the Corporation's policies, procedures and practices at all
levels. The Audit Committee's primary duties and responsibilities are to:
* Serve as an independent and objective party to monitor the Corporation's
financial reporting process and internal control system.
* Review and appraise the audit efforts of the Corporation's independent
accountants and internal auditing department.
* Provide an open avenue of communication among the independent accountants,
financial and senior management, the internal auditing department, and the
Board of Directors.
The Audit Committee will primarily fulfill these responsibilities by carrying
out the activities enumerated in Section IV of this Charter.
II. COMPOSITION
The Audit Committee shall be comprised of three or more directors as
determined by the Board, each of whom shall be independent directors as defined
by the rules of the New York Stock Exchange, and free from any relationship
that, in the opinion of the Board, would interfere with the exercise of his or
her independent judgment as a member of the Committee. All members of the
Committee shall have a working familiarity with basic finance and accounting
practices, and at least one member of the Committee shall have accounting or
related financial management expertise. Committee members may enhance their
familiarity with finance and accounting by participating in educational programs
conducted by the Corporation or an outside consultant.
The members of the Committee shall be elected by the Board at the annual
organizational meeting of the Board or until their successors shall be duly
elected and qualified.
III. MEETINGS
The Committee shall meet at least four times annually, or more frequently
as circumstances dictate. As part of its job to foster open communication, the
Committee meets at least annually with management, the director of the internal
auditing department and the independent accountants in separate executive
sessions to discuss any matters that the Committee or each of these groups
believe should be discussed privately. In addition, the Committee or at least
its Chair shall meet with the independent accountants and management quarterly
to review the Corporation's financial statements consistent with IV.4. below.
-19-
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
Documents/Reports Review
------------------------
1. Review and update this Charter periodically, at least annually, as conditions
dictate.
2. Review the organization's annual financial statements and any reports or
other financial information submitted to any governmental body, or the public,
which include any certification, report, opinion, or review rendered by the
independent accountants.
3. Review the regular internal reports to management prepared by the internal
auditing department and management's response.
4. Review with financial management and the independent accountants the
Corporation's quarterly reports on Form 10-Q prior to its filing. The Chairman
of the Committee may represent the entire Committee for purposes of this review.
Independent Accountants
-----------------------
5. Recommend to the Board of Directors the selection of the independent
accountants, considering independence and effectiveness and approve the fees and
other compensation to be paid to the independent accountants. On an annual
basis, the Committee shall review and discuss with the accountants all
significant relationships the accountants have with the Corporation to determine
the accountants' independence. The Committee must pre-approve any services
provided by the independent accountants.
6. Review the performance of the independent accountants and approve any
proposed discharge of the independent accountants when circumstances warrant.
7. Periodically consult with the independent accountants out of the presence of
management about internal controls and the fullness and accuracy of the
organization's financial statements.
Financial Reporting Processes
-----------------------------
8. In consultation with the independent accountants and the internal auditors,
review the integrity of the organization's financial reporting processes, both
internal and external.
9. Consider the independent accountants' judgments about the quality and
appropriateness of the Corporation's accounting principles as applied in its
financial reporting.
10. Consider and approve, if appropriate, major changes to the Corporation's
auditing and accounting principles and practices as suggested by the independent
accountants, management, or the internal auditing department.
Process Improvement
-------------------
11. Establish regular and separate systems of reporting to the Audit Committee
by each of management, the independent accountants and the internal auditors
regarding any significant judgments made in management's preparation of the
financial statements and the view of each as to appropriateness of such
judgments.
-20-
12. Following completion of the annual audit, review separately with each of
management, the
independent accountants and the internal auditing department any significant
difficulties encountered during the course of the audit, including any
restrictions on the scope of work or access to required information.
13. Review any significant disagreement among management and the independent
accountants or the internal auditing department in connection with the
preparation of the financial statements.
14. Review with the independent accountants, the internal auditing department
and management the extent to which changes or improvements in financial or
accounting practices, as approved by the Audit Committee, have been implemented.
(This review should be conducted at an appropriate time subsequent to
implementation of changes or improvements, as decided by the Committee.)
Ethical and Legal Compliance
----------------------------
15. Review periodically the Code of Ethical Conduct and ensure that management
has established a system to enforce this Code.
16. Review management's monitoring of the Corporation's compliance with the
organization's Ethical Code, and ensure that management has the proper review
system in place to ensure that the Corporation's financial statements, reports
and other financial information disseminated to governmental organizations, and
the public satisfy legal requirements.
17. Review activities, organizational structure, and qualifications of the
internal audit department.
18. Review, with the organization's counsel, legal compliance matters including
corporate securities trading policies.
19. Review, with the organization's counsel, any legal matter that could have a
significant impact on the organization's financial statements.
20. Perform any other activities consistent with this Charter, the Corporation's
By-laws and governing law, as the Committee or the Board deems necessary or
appropriate.
-21-
Directions to the Annual Meeting of Shareholders
From Philadelphia:
Atlantic City Expressway to the Egg Harbor Exit 17. Left onto Route 50 north,
turn right onto Route 30. Left onto Bremen Avenue, 2 1/4 miles to Renault.
From North Jersey:
Garden State Parkway south to Exit 44. Sharp right onto Moss Mill Road
(Alt. #561), follow 5 miles to Bremen Avenue. Turn right, 1/4 mile to Renault.
From Atlantic City:
Route 30 west approximately 16 miles to Bremen Avenue. Right at the Renault wine
bottle, 2 1/4 miles to Renault.
From South Jersey:
Garden State Parkway north to Exit at rest stop/service area, mile marker #41.
Proceed to north end of service area. Follow signs to Jim Leeds Road. At traffic
light turn left. Proceed to fork, bear right and continue on Route 561. Continue
to Bremen Avenue and turn right. 1 1/2 miles to Renault.
Back Cover
------------------------
Vote by Telephone
------------------------
Have your proxy card
available when you call
the Toll-Free number
1-800-542-1160 using a
touch-tone telephone
and follow the simple
directions presented to
record your vote.
------------------------
Vote by Internet
------------------------
Have your proxy card
available when you
access the website
http://www.votefast.com
and follow the simple
directions presented to
record your vote.
------------------------
Vote by Mail
------------------------
Please mark, sign and
date your proxy card
and return it in the
postage-paid envelope
provided or return it
to: Corporate Election
Services, P. O. Box
1150, Pittsburgh, PA
15230-1150.
Vote by Telephone Vote by Internet Vote by Mail
Call Toll-Free using a Access the Website and Return your proxy
Touch-Tone phone: Cast your vote: in the postage-paid
1-800-542-1160 http;//www.votefast.com envelope provided
--------------------------------------------------------------------------------
Vote 24 hours a day, 7 days a week!
Your telephone or Internet vote must be received by 11:59 p.m. Eastern Daylight
Time on April 28, 2004 to be counted in the final tabulation.
Your control number is:
Proxy must be signed and dated below.
Please fold and detach card at perforation before mailing.
--------------------------------------------------------------------------------
SOUTH JERSEY INDUSTRIES, INC. Board of Directors Proxy
--------------------------------------------------------------------------------
This proxy is solicited on behalf of the Board of Directors for the Annual
Meeting of Shareholders on April 29, 2004.
The shares represented by this Proxy will be voted as directed by the
shareholder. If no direction is given,they will be voted in favor of the
election of the listed nominees as a group and in favor of proposal 2.
________________________
Signature
________________________
Signature
Date: , 2004
Please sign exactly as name
is shown to the left. When
shares are held by joint
tenants, both should sign.
When signing as attorney,
executor, administrator,
trustee or guardian, please
give full title as such.
VOTING INSTRUCTIONS ON REVERSE SIDE
Proxy must be signed and dated on the reverse side.
Please fold and detach card at perforation before mailing.
--------------------------------------------------------------------------------
SOUTH JERSEY INDUSTRIES, INC. Proxy
--------------------------------------------------------------------------------
The undersigned shareholder hereby appoints C. Biscieglia and R.H. Walker, Jr.,
and each of them, attorneys and proxies with full power of substitution and
revocation to vote the number of shares of Common Stock the undersigned would
be entitled to vote if personally present at the Annual Meeting of Shareholders
of South Jersey Industries, Inc. on Thursday, April 29, 2004, and at any
adjournments thereof, as indicated below and in accordance with the judgment
of said attorneys and proxies on any other business which may come before the
meeting or any adjournments, all as set forth in the accompanying notice and
proxy statement, the receipt of which the undersigned acknowledges.
1. For the election of five Directors:
Class II Term expiring in 2006 (01) Thomas A. Bracken
Class III Term expiring in 2007 (02) Edward J. Graham
(03) Helen R. Bosley
(04) Herman D. James, Ph.D.
(05) Ambassador William J. Hughes
|_| FOR all nominees listed above. |_| WITHHOLD AUTHORITY
(except as shown to the contrary below) to vote for all nominees listed above.
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name or number on the line below:)
2. To approve the action of the Board of Directors in appointing Deloitte &
Touche LLP as auditors of the Company for the year 2004.
|_| FOR |_| AGAINST |_| ABSTAIN
3. To act upon such other business as may properly come before the meeting or
any adjournment or adjournments thereof.
PROXY TO BE SIGNED AND DATED ON THE REVERSE SIDE